DTN Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil futures rose more than 4% Monday morning after the U.S. and Iran exchanged fresh attacks over the weekend, fueling concerns over a further military escalation and a renewed supply disruption as traffic through the Strait of Hormuz slowed to multi-week lows.

By 8:30 a.m. ET, ICE Brent for September delivery was up $3.09 to trade near $79.10 bbl, and NYMEX WTI for August delivery rose $2.87 to $74.28 bbl.

Downstream, NYMEX ULSD futures for August delivery advanced $0.1422 to $3.6955 gallon, and front-month RBOB futures rose $0.0855 to $3.0701 gallon.

The U.S. Dollar Index was little changed, up 0.025 points to 100.78 against a basket of foreign currencies.

This most recent flare-up in hostilities, the most intense since last month's ceasefire extension, reached its apex on Sunday amid a barrage of U.S. strikes on military sites and Iranian attacks on U.S. bases and energy infrastructure in neighboring countries.

Tehran on Sunday pronounced the Strait of Hormuz closed, while Washington insisted that tankers were transiting via a parallel U.S.-protected corridor along the Omani coast. Ship traffic data showed that flows this weekend fell to their lowest in five weeks. Observable crossings have almost completely ceased, while a handful of tankers attempted to traverse the chokepoint with transponders turned off.

The resurgence of fighting fueled concerns over the trajectory of the current supply recovery of Middle Eastern oil. The Organization of the Petroleum Exporting Countries in their most recent monthly report published on Monday said that crude oil output from the producer group and its allies, including former member UAE, last month rose by 3 million bpd from May. At 14.08 million bpd, however, combined Iraqi, Kuwaiti, Saudi and Emirati crude output was still lagging pre-war levels by some 6.2 million bpd, or 30.7%.